The impact of servitization transformation on the ESG performance of manufacturing firms

Abstract

In the new era of green and low-carbon economic transformation, servitization transformation enhances the production efficiency and perceptual capabilities of manufacturing firms and offers a novel approach to fulfilling environmental, social, and governance (ESG) responsibilities. This study employs a sample of Chinese-listed manufacturing firms from 2009 to 2021 to provide a theoretical analysis of the intrinsic mechanisms by which servitization transformation impacts ESG performance, including the roles played by total factor productivity, human capital, and firm goodwill. We then empirically examine the impact and mechanisms by which servitization transformation impacts the ESG performance of firms, finding the following. First, servitization transformation significantly improves ESG performance and this conclusion still holds following a series of robustness tests. Second, servitization transformation enhances ESG performance through the following three channels: improving total factor productivity, optimizing the structure of human capital, and accumulating firm goodwill. Third, the ESG performance of state-owned, high-tech, and large firms is more sensitive to servitization transformation. This study enriches and expands the application of servitization transformation research to manufacturing, providing policy insights that would allow manufacturing firms to better fulfill their ESG responsibilities and promote green and sustainable economic development.